The Rockefeller Bill – Negative Option Hurt Locker

Posted on December 23rd, 2010

Merry Christmas! In internet marketing news, a bill just flew through Congress that is going to put the hurt on a whole load of internet marketers. Those in the know are calling it the “Oh Shit Rockefeller” Bill. Others know it as the “Restore Online Shoppers’ Confidence Act” or simply S.3386. It is designed to prevent negative option programs, and expressly prohibits merchants from passing payment information to 3rd parties for the purpose of “post transaction sales.”

I’m a bit surprised that I haven’t seen it mentioned on any blogs or forums yet. Highlights:

- The bill expressly prohibits data transfer of any consumer financial information for the purpose of billing a 3rd party transaction. For post-transaction upsells, billing information has to be re-collected. Ouch.

- The bill requires material terms of all negative option offers to be disclosed prior to the collection of consumer billing information.

- The bill includes references to credit, debit, AND bank account information (meaning that the ACH and check 21 billers in the industry are no longer off the hook.)

Obviously this bill is going to change the way upsells, cross-sells, and negative options are marketed. At the very least it will give the FTC a new paddle with which to bitch-slap the industry. Thank you page monetization will never be the same.

Text of the bill is available here.

Enjoy!

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Posted in Business, Politics | Tagged as: , | 14 Comments
  • JB

    See what happens when you allow Democrats to run things.

    • Extra Smart Liberal

      bite me.
      not all of us had the wool pulled over our eyes during the election.
      Maine Dem.

      • jozephyr

        It’s the Next Wool Over to sheeple all the people. May we happily enjoy an even more brazen year of fascist rule.

  • Rcloseoutsbusiness

    I’m not certain how this is going to affect me as an internet marketer.

    However, from a consumer standpoint this bill has some positive points. I have been bent over the table a time or two by merchants passing around my payment information to other merchants behind my back and or charging me after the fact for so-called “upsells” I did not authorize.

    On more than one occasion I have had charges suddenly appear out of nowhere from unknown merchants or from merchants I bought from but for things they tried to upsell me but I declined.

    Even though I have been successful in MOST instances in having these bogus charges to my card removed I have not been successful in ALL instances.

    Even when successful it has been a very time consuming headache and pain in the ass to get these phony charges removed.

    Another case I think of a few scam artists screwing it up for everybody else.

    My two cents.

  • Hermyak

    Sadly, this will affect about nothing. 99.9999999% of the companies still doing negative option are offshore in countries where the law will mean less than a bowl of rice. The USA has zero power over any of those. This will affect male enhancement, neutraceuticals, get rich quick and porn people like, oh about, ZERO, as all of those types of companies are offshore, along with their owners. Another airless law that only helps push more money out of the USA to places where entrepreneurs can rape and pillage as they like.

    • Anonymous

      It will impact companies like webloyalty, vertrue, and all those other shopping cart end of process companies, too.

  • Sean

    Exactly what is to be expected when you put liberal dem’s in charge…

  • Guest

    can someone explain the top three concerns is English please? Maybe if someone can describe each clause with an online scenario perhaps we can better understand the pros & cons.

    • Anonymous

      upsells after an online transaction – card on file, account on file, etc – are no longer legal.

      • Guest789

        baldguitardude – That isn’t accurate.

        Only upsells which then route your card information to another party to be billed there are no longer legal.

        You can still offer legitimate upsells on your own site for your own products. The consumer just needs to know clearly what they are agreeing to. No smoke and mirrors but instead an informed purchase decision where your terms are understand and agreed upon.

        • Anonymous

          “Only upsells which then route your card information to another party to be billed there are no longer legal.”

          That is what a card on file transaction is.

          However, you are correct that you are still allowed to upsell your own product without re-collecting payment information.

  • Anonymous

    upsells after an online transaction – card on file, account on file, etc – are no longer legal.

  • http://pulse.yahoo.com/_7BSZX7EVFCK7ABOADKIYJ3CC5E ArthurF

    Look, the upsells on the thank you page were always kind of “cheesy” and everyone who did them just turned their heads because of the free money. I don’t see such a loss there but the other component is recurring revenue model that has been completely destroyed. Consider my personal favorite, security software … those companies get 70% of profits from recurring revenue. Having to “conspicuously discloses all material terms” will absolutely destroy those businesses.

    But who is defining “conspicuously” I don’t know. Another bill with a good amount of ambiguity … just what we need.

    Arthur

  • Berzerker

    I guess I shouldn’t be surprised by the over-reaction on this. Our merchant account already prohibits every practice that this bill prohibits. If your business model is “ripping people off” then I guess this sucks for you, but – well – if that’s the case, I will ship you the world’s smallest violin for free – just pay $7 processing, and we’ll of course bill you $47 a week for a box of sugar pills that will be force-shipped to you until you can figure out where it’s coming from and how to stop us.

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